Markets closed mixed on Wednesday, with the S&P and Nasdaq closing in the red while the Dow closed in the green in a choppy session. Asia markets fell overnight and Europe stocks are doing the same this morning with the DAX off over 2% as I write this. U.S. futures are pointing to a lower open, the Dollar is higher while Oil, Gold, and Yields are lower.
And this is what UPB is reading this morning: https://www.optionmillionaires.com/morning-reads-52/
Annoying would be a proper way to explain yesterdays session. Stocks couldn't find any strong bids and sellers couldn't continue the action from Tuesday. All this meant was option premiums eroded - not the type of trading session that works well for calls or puts. This morning we got the May PCE data, which is the Feds preferred gauge on inflation. It actually came in lower than expectations. Futures are trying to pare some of the losses after the release. Last months PCE also came in a tad lower than expectations but CPI numbers came in above expectations causing a sell-off. Will be interesting to see how this plays out today and if markets can find any footing. Would be a good sign here if markets can recoup that $380 handle heading into tomorrow otherwise that $360 level will be coming into play shortly:
IBM was looking great agin yesterday morning but found some pressure in the afternoon to close lower. Still setting up nicely and would bode well if it can hold $140 today:
The BPT bull-flag setup is still in play. A green close today and think that $25 handle comes tomorrow:
BHC is still setting up nicely despite yesterdays pullback. Think that $9 handle comes today or tomorrow and it can start looking to head back over $10:
As I have mentioned many times over the past few months, I prefer to play bounces then look to get puts with premiums elevated due to the volatility. If the market comes under pressure today and the SPY can't hold $370, I will be looking at some TZA calls as a hedge. On the flip side, if markets finds some support after the PCE data, then may look at some speculative lotto calls into tomorrow in my favorite names like U, SPOT, and ROKU.
Lastly, I am also still watching APPS for a possible entry, The stock was strong for the entire session yesterday on the positive analyst commentary. It is gapping lower this morning so maybe a nice bounce trade here for a move back over $20 in the next week or so:
Here are the analyst changes of note for today:
FedEx price target raised to $325 from $300 at KeyBanc |
| KeyBanc analyst Todd Fowler raised the firm's price target on FedEx to $325 from $300 and keeps an Overweight rating on the shares. The analyst believes management adequately addressed key areas of concern and established a reasonable path to earnings exceeding $30/share by fiscal 2025. Additionally, Fowler would not overlook a raised dividend payout ratio and lower capex targets supporting improved free cash and capital deployment. While the analyst shares macro concerns and acknowledges historically inconsistent execution, levers around operational efficiencies and network integration, as well as reduced cost headwinds, should help support margin improvement somewhat independent of macro trends, with valuation compelling |
Papa John's price target lowered to $110 from $120 at KeyBanc |
| KeyBanc analyst Eric Gonzalez lowered the firm's price target on Papa John's to $110 from $120 to reflect lower peer group valuations, while keeping an Overweight rating on the shares. The analyst believes Papa John's North America same-store sales trends likely remained positive in Q2 thanks to strong consumer reaction to "Epic Peperoni Stuffed Crust" and modest menu pricing with minimal customer resistance. Moreover, Gonzalez thinks positive trends are likely to be sustained in Q3 with new menu news expected in late summer/early fall. However, while commodities have moderated since mid-May and staffing likely improved somewhat, input costs are still significantly higher than year-ago levels, and he expects margins to remain under pressure in the very near-term |
| Visa price target lowered to $250 from $275 at Truist |
| Truist analyst Andrew Jeffrey lowered the firm's price target on Visa to $250 from $275 but keeps a Buy rating on the shares as part of a broader research note on IT Services. While he remains long-term bullish on leading Digital Native stocks and "safe haven" traditional networks, Legacy Processors offer the least attractive risk/rewards amid near-term margin risk and share challenges, the analyst tells investors in a research note. Visa is also a relative safe haven during a period of slowing economic growth and as it benefits from the secular shift to ePayments and is materially indifferent to whether U.S. consumers choose credit or debit, Jeffrey adds |
| PayPal price target lowered to $80 from $85 at Truist |
| Truist analyst Andrew Jeffrey lowered the firm's price target on PayPal to $80 from $85 and keeps a Hold rating on the shares as part of a broader research note on IT Services. While he remains long-term bullish on leading Digital Native stocks and "safe haven" traditional networks, Legacy Processors offer the least attractive risk/rewards amid near-term margin risk and share challenges, the analyst tells investors in a research note. Despite its eCommerce first-mover advantage, strong balance sheet, above average organic revenue growth and relatively attractive valuation, he is reluctant to recommend a stock that is losing US branded SMB market share to Digital Native disruptors, Jeffrey adds |
| MasterCard price target lowered to $420 from $450 at Truist |
| Truist analyst Andrew Jeffrey lowered the firm's price target on MasterCard to $420 from $450 but keeps a Buy rating on the shares as part of a broader research note on IT Services. While he remains long-term bullish on leading Digital Native stocks and "safe haven" traditional networks, Legacy Processors offer the least attractive risk/rewards amid near-term margin risk and share challenges, the analyst tells investors in a research note. MasterCard is his "favorite Traditional FinTech" offering the deepest moat, most advanced beyond-card services, superior management, clean balance sheet, powerful operating leverage, and most exposure to a cross-border recovery however, Jeffrey adds |
And here is what I am watching today: APPS, SPOT, U, ROKU, BHC, BPT, HSKA, and POOL.
Let's have a great day!
-JB